Trading Ripple

What is Ripple?

Ripple was originally designed as a payment solution using blockchain technology which aimed to solve issues impacting digital payment systems. Ripple fulfils a global need for a Cryptocurrency that facilitates cross-border payments without the usual costs and delays associated with other currency transfers.

Ripple is the Cryptocurrency that has been embraced by some of the leading names in international banking, like Santander, American Express and Standard Chartered, who want to use Ripple for their own cross-border payments.

The potential for the growth of Ripple is considerable as it seeks to a common currency that can support other transactions. The fact that the big institutions are backing it means it is fulfilling a need within the payments ecosystem.

Ripple transactions are a lot quicker than many other Cryptocurrency transactions – for buyers of the physical currency, a transaction can take seconds rather than hours or days.

How to trade Ripple

Many people are using Ripple to make international payments already, but it can still be cumbersome to trade Ripple on a regular basis using a wallet. You can take advantage of the price volatility to trade on price movements of Ripple using CFDs.

Ripple has a real world value in currency, which will go up and down over time. This is the amount of another established currency (for example USD) one Ripple unit can be exchanged for.

• Without owning: take advantage Ripple price volatility without the need for a wallet
• Volatility: react more quickly to changes in price without owning Ripple
• Leverage: trade Ripple with only a small initial investment

Ripple can be traded around the clock, as it does not depend on a particular market being open.

Be aware, however, that using leverage to trade Ripple means you will be more exposed to changes in the price. Make sure that you keep stop losses in place to protect yourself against sudden price reversals and you are aware of what your total exposure to the Ripple price is.

Buying vs trading Ripple

Buying Ripple requires the use of specialist Cryptocurrency platforms and a Cryptocurrency ‘wallet’ to store your currency in.

Trading Ripple using a CFD allows you to react even more quickly to price changes and take advantage of short term volatility. You don’t need to own Ripple to be able to trade its price.

Factors impacting Ripple

There were some early concerns about what might happen if the banks in the Ripple network dumped a large amount of the Cryptocurrency on the market. As a consequence, the network has stored 55 million in smart contracts (a reserve of the currency) which is being fed into the market at the rate of 1 million every month.

This process copies the effect of mining with other Cryptocurrencies but Ripple itself is not a Cryptocurrency that relies on mining to sustain itself. It is first and foremost a payments platform.

What is the City Index policy on Cryptocurrencies forking?

In the event that the current cryptocurrency splits into two, new cryptocurrencies are created, this is known as a hard fork. We will generally follow the cryptocurrency that has the majority consensus of cryptocurrency users and will therefore use this as the basis for our prices. 

In addition we will also consider the approach adopted by the exchanges we deal with, which will help determine the action we take. We reserve the right to determine which cryptocurrency unit has the majority consensus behind them. 

As the hard fork results in a second cryptocurrency, we reserve the right to create an equivalent position on client accounts to reflect this. However, this action is taken at our absolute discretion, and we have no obligation to do so.  

If the second cryptocurrency is tradeable on major exchanges, which may or may not include the exchanges we deal with, we may choose to represent that value, but have no obligation to do so. 

We may do this by making the product available to close based on the valuation, or by booking a cash adjustment on client accounts.  

If, within a reasonable timeframe, the second cryptocurrency does not become tradeable, then we may void positions that had previously been created at no value on client accounts. 

Over periods of substantial price volatility around fork events, and we may take any action as we consider necessary in accordance with our terms and conditions including suspending trading throughout if we deem not to have reliable prices from the underlying market.